Know your stock: Enviro Infra Engineers shares extend gain for 5th straight day, scrip soars 140% from IPO price

10 crore shares changed hands in two days—more than double the one-week average of 4 crore shares, as per Moneycontrol data.

Shares of Enviro Infra Engineers soared 6 percent to Rs 355 in morning trade on December 17, marking their fifth straight winning streak and a whopping 50 percent surge in just five sessions. Trading frenzy continued, with 10 crore shares changing hands in two days—more than double the one-week average of 4 crore shares, as per Moneycontrol data.

Enviro is a recent entrant in the market, debuting on November 29. The shares listed at a premium of nearly 50 percent over the issue price. The company’s Rs 650-crore initial public offering (IPO) garnered an overwhelming response, with a subscription of 89.90 times during its three-day bidding period.

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The company specialises in designing, constructing, operating, and maintaining water and wastewater treatment plants (WWTPs) and water supply scheme projects (WSSPs) for government authorities.

Over the past seven years, it has successfully developed 28 WWTPs and WSSPs across India as of June 30, 2024, including 22 projects with capacities of 10 MLD or more. The company’s order book stood at Rs 1,906.28 crore in the June quarter, comprising 21 WWTPs and WSSPs.

Its business is heavily reliant on WWTP and WSSP projects funded by the Central and State Governments, with revenues tied to government budgetary allocations and contracts awarded. The company faces competition from multiple players bidding for similar projects, including VA Tech Wabag, Ion Exchange India, EMS, and Vishnu Prakash R Punglia.

Given the government's heightened focus on water treatment and waste water management, Enviro could be one of the companies to benefit from such an initiative. While presenting the budget, Finance Minister Nirmala Sitharaman said that the Centre will be working in partnership with the state governments and Multilateral Development Banks to promote water supply, sewage treatment and solid waste management projects.

India's water and wastewater sector is significant, with an estimated annual market size of Rs 25,000-30,000 crore, split roughly 40:60 between water and wastewater. The sector is projected to grow at 12-15 percent annually over the next 4-5 years, according to research by Niveshaay Investment Advisory. The firm expects investments of Rs 50,000-60,000 crore in the space over the next three years, driven by government schemes.

More importantly, the Finance Minister announced a budgetary allocation of Rs 69,926.65 crore for the Jal Jeevan Mission, up from around Rs 69,846.31 crore in 2023-2024. This is the government's flagship mission which aims to provide “functional water connections” to every rural household.

Analysts have recommended a "long-term hold" on Enviro Infra Engineers, citing its robust fundamentals and growth prospects in the water and wastewater treatment sector.

At 11:30 am, shares of the company were trading at Rs 350, higher by 5.6 percent from the last close.

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